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Lower tier cities drive luxury sales

News, 26 November 2015

NEW DELHI: More than one third of luxury brand sales in India come from lower tier cities, according to a new study which highlights the different thinking of consumers there from those in the metros.

The report from the Confederation of Indian Industry and researcher IMRB International, titled Emerging Consumers of Luxury – India Tiers 2 & 3 was based on interviews with consumers in these cities aged 20 to 55 and with an annual household income of over Rs 1 crore.

It found that 35% of sales of luxury brands came from places like Chandigarh, Ludhiana, Kanpur, Coimbatore, Anand, Bhopal, Patna, Kochi and Rajkot, the Economic Times reported.

What these high net worth individuals were actually buying was gender dependent, with much of men's spending directed towards cars, while women favoured apparel.

"In keeping with what we saw as the psychological characteristics of the consumer in these cities, men tend to need to signal their power or status that is possibly best done through automobiles which by sheer size and presence are hard to miss," the study noted.

Luxury watches too were an item that sent particular social signals for men while clothing came down their list of priorities.

Women, on the other hand, were more interested in buying luxury products they could enjoy, hence their focus on apparel.

But, Fibre2fashion noted, they tended to be cautious, owning perhaps a couple of designer handbags to create "just the right impression" in society.

"The small town woman still carries her cultural baggage along with her new found modern and semi-westernised identity," it said.

Quality was the thing that these consumers in lower tier cities valued most in luxury products, being cited by 75% of respondents, followed by luxuriousness (69%), style (64%), modernity (63%) and reliability (61%).

One area where lower tier cities differ markedly from metros is in the experiential aspects of luxury ownership, such as art or travel. These remain at very low levels of penetration in the tier 2 and 3 towns, the report said.

Data sourced from Economic Times, The Hindu; additional content by Warc staff